UBS ups KAZ Minerals to 'buy' from 'neutral'

22nd Aug 2016 07:31

(ShareCast News) - UBS upgraded KAZ Minerals to 'buy' from 'neutral' and lifted the price target to 270p from 150p saying it is now delivering on growth.In addition, it said it likes the group's strong growth profile, and execution risk at Bozshakol and Aktogay has decreased materially."A site visit in Q4-16 should also bolster market confidence on Aktogay, and execution should be smoother given the similarity to Bozshakol."With shares trading at 0.5x net present value, we think the risk reward is attractive, and we upgrade to buy."The bank said reduced execution risk and a stable copper price increase the probability that KAZ can raise the liquidity it needs to complete Aktogay, adding that significant progress is likely to be made by the end of the year."China Development Bank has provided 91% of KAZ's current debt facilities, at a rate of about 6%. Removing the remaining liquidity risk should be a positive catalyst."Last week, KAZ reported a rise in first-half earnings and said its new Bozshakol project is on track for commercial output in the second half.For the six months to the end of June, the copper miner said core profit rose to $115m from $88m in the same period last year. Pre-tax profit surged to $91m fro $2m last year.Although revenue fell to $302m from $341m, cost of sales declined to $170m from $282m and administrative expenses dropped to $51m from $71m.